09 October, 2015

7 Types Of Companies In India

In recent times, I was exposed to the (not so) secret knowledge of the types of companies there are in this great nation of ours. I realized that as companies grow, they face a trade-off between legal liability of owners (risk) and compliance cost (return). So I thought, ‘hey! That sounds a lot like something else I know of.’ Even in relationships, the more you tell people about yourself, you become vulnerable to them and obliged to do the “right things”. But then, that’s the only way to live together. Isn’t it?

1. Proprietorship Firm – The Teenage Boy

Much like a Teenager, this is a carefree company which has no obligations to any partners, because there are none! This company is still trying to make a mark and a name for itself, asking partners out, mostly getting rejected. The company is liable for whatever it does and no one else shares the blame. The company has a lot of secrets as well, which are mostly irrelevant so no one bothers. All in all, it’s a happy adolescence.


2. Partnership – Live in Relationships

Partners are agents of the firm. Whatever happens to one, the other shares the brunt of the burn. They may choose to leave whenever they want; and sometimes the departures are very violent. But mostly everyone understands that everyone’s here for themselves. And while we’re together, why not have a little fun?


3. Limited Liability Partnerships – Friends with Benefits

You don’t need to share your living quarters with someone, and full disclosure may not be mandatory, but then be prepared to know who runs the show here. Because that person will call the shots and pay the price. You may have a good time while it lasts, but you always be prepared for an imminent dumping.


4. Private limited company – Marriage

You own the show, but you might not control it any longer. Here for the first time in your life you realize the difference between “taking the blame” and “being responsible” for something. And they might be unrelated. And that does screw with you, but that’s the world you were born it. All you can do is to subtly diffuse the tensions you see springing up every now and then. Sooner or later, the people responsible for the trouble will be revealed, all you’re asked for is a thorough interrogation.


5. Public limited company – Marriage, in a joint family, in a small village

Everyone knows you. And everyone has a stake. You might be mistaken in your thought that it’s you who got married but in reality everyone in your village (and in the neighboring ones) knows more about your marriage than you do. You’re swarmed with advices and questions and you wonder when the hell would you get time to really what you do, rather than justifying what you do is the right thing to do. Often, you do not have any say in the matter and you wonder who the hell is running the show. Adam Smith perhaps.


6. Listed PSU – Family Life

You have stopped existing for yourself. Anyone can have a right on you, whether they have a stake in you, or are your friends, or are the people you work with, or none of those people. No one apart from you is to be blamed for what happens in your life while everyone seems to have a good control. On the bright side, everyone wants a piece of you (if you can look at it that way). Yes, anyone can screw with you.


7. Foreign Subsidiaries – Extra-marital affair

This is the one place where you get a minimum compliance and low legal liability. A great haven, but takes some investment before it starts paying for itself. You reap the benefits and mostly people choose not to question you about your activities in these foreign trips. If only you could spend the rest of your time there…